Fall Of MG Rover
BSTR/166
IBS Center for Management Research
The Fall of MG Rover
This case was written by K. Yamini Aparna, under the direction of Vivek Gupta, IBS Center for Management Research.
It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.
2005, IBS Center for Management Research. All rights reserved.
To order copies, call +91-8417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally,
Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org
www.icmrindia.org
BSTR/166
The Fall of MG Rover
“Rover’s demise must give us all pause for thought about how we have failed to protect our once magnificent manufacturing industry and why…”1
- Editorial, Daily Express, April 16, 2005.
“The death of a factory and the end of a great tradition… the suspects...British Aerospace, BMW, the Government, Phoenix Four…”2
- Sean O 'Grady, The Independent, April 26, 2005.
MG ROVER SEEKS BANKRUPTCY
In its lifespan of over a century, MG Rover Group Limited (MG Rover), one of the oldest and largest automobile manufacturers in the UK, went through countless mergers, takeovers and partnerships. The last merger negotiations the company went through before it folded up, took place in June 2004. This time MG Rover was negotiating with China‟s Shanghai Automotive
Industrial Corporation (SAIC)3 to sell 70 per cent of its equity stake to SAIC. These negotiations were critical for MG Rover‟s survival, given the fact that it had been a chronic loss maker since the mid-1970s. If the deal materialized, MG Rover was to develop a new car model in collaboration with SAIC in an effort to pull up its falling sales. However, SAIC required MG
Rover to be solvent at the time of signing the deal and for two years thereafter. On an examination of MG Rover‟s books, SAIC
IBS Center for Management Research
The Fall of MG Rover
This case was written by K. Yamini Aparna, under the direction of Vivek Gupta, IBS Center for Management Research.
It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.
2005, IBS Center for Management Research. All rights reserved.
To order copies, call +91-8417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally,
Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org
www.icmrindia.org
BSTR/166
The Fall of MG Rover
“Rover’s demise must give us all pause for thought about how we have failed to protect our once magnificent manufacturing industry and why…”1
- Editorial, Daily Express, April 16, 2005.
“The death of a factory and the end of a great tradition… the suspects...British Aerospace, BMW, the Government, Phoenix Four…”2
- Sean O 'Grady, The Independent, April 26, 2005.
MG ROVER SEEKS BANKRUPTCY
In its lifespan of over a century, MG Rover Group Limited (MG Rover), one of the oldest and largest automobile manufacturers in the UK, went through countless mergers, takeovers and partnerships. The last merger negotiations the company went through before it folded up, took place in June 2004. This time MG Rover was negotiating with China‟s Shanghai Automotive
Industrial Corporation (SAIC)3 to sell 70 per cent of its equity stake to SAIC. These negotiations were critical for MG Rover‟s survival, given the fact that it had been a chronic loss maker since the mid-1970s. If the deal materialized, MG Rover was to develop a new car model in collaboration with SAIC in an effort to pull up its falling sales. However, SAIC required MG
Rover to be solvent at the time of signing the deal and for two years thereafter. On an examination of MG Rover‟s books, SAIC
References: 1. “What Will Rover Collapse Mean?,” www.bbc.co.uk, 08 April, 2005. 2. “MG Rover Admits To Group’s Collapse,” www.edition.cnn.com, 08 April, 2005 3 Road,” www.guardian.co.uk, 08 April, 2005. 4. “Potted History Of MG Rover,” www.utv.com, 08 April, 2005. 5. “How It All Went Wrong At Rover,” www.manchesteronline.co.uk, 08 April, 2005. 6. “End Of The Road For MG Rover,” www.manchesteronline.co.uk, 08 April, 2005 7 8. Brady, Chris, “English Patient Unsuitable Case For Treatment,” The Observer, 10 April, 2005. 9. Scott-Joynt, Jeremy, “Phoenix Four’s Image Could Be Revived,” www.bbc.co.uk, 12 April, 2005. 10. Downes, Steven, “MG Rover: 30 Years of Hurt,” www.driving.timesonline.co.uk, 15 April, 2005. 11. “Deal for MG Rover Falls Through,” www.msnbc.msn.com, 15 April, 2005. 12. Rice-Oxley, Mark, “MG Rover 's Collapse Jolts British Election,” www.csmonitor.com, 15 April, 2005. 13. Fletcher, Matthew, “MG Rover to Fire 5,000 Workers as Talks Collapse,” www.bloomberg.com, 15 April, 2005. 14. “People Want Answers,” www.guardian.co.uk, 16 April, 2005. 15. “Enquiry Launched into MG Rover Collapse,” www.abc.net.au, 17 April, 2005. 16. Jones, Alan, “MG Rover Crisis Begins To Bite With Suppliers,” 19 April, 2005. 17. Griffiths, Ian, “Bounty For Underpaid Men at The Longbridge Wheel Will Rise to £50m,” www.guardian.co.uk, 19 April, 2005. 18. Feltham, C Michael, “The Rover Cars Fiasco: An Object Lesson in Government Incompetence, Mismanagement and Perfidy,” www.axisoftlogic.com, 19 April, 2005. 19. Chapman, Giles, “MG Rover: It’s Over. What Went Wrong?,” www.independent.co.uk, 19 April, 2005. 20. Fidler, Stephen and Denning, Liam, “Final Gamble That Failed To Pay Off,” www.ft.com, 21 April, 2005. 21. Barney Jopson and James Mackintosh, “Findings On Rover’s Finances Expected After Election,” www.ft.com, 21 April, 2005. 22. Jackson, Roland, “Auto History Repeats Itself With Car Maker MG Rover,” www.etaiwannews.com, 25 April, 2005. 23. O‟ Grady, Sean, “So Who Killed MG Rover?,” www.motoring.indenpendent.co.uk, 26 April, 2005. 24. “MG Rover and the Need for an International Perspective,” www.wsws.org, 27 April, 2005.